Brazil scraps EV tariff break for China carmaker BYD amid pressure from rivals

Brazil has ended a temporary tariff exemption that allowed electric and hybrid vehicles assembled using imported parts from China to enter the country at sharply reduced costs, closing a measure that fuelled months of confrontation between the government, Chinese carmaker BYD and Brazil’s established automotive industry.

The exemption expired on January 31 and was not renewed, the South China Morning Post confirmed with multiple sources on Wednesday.

Companies like BYD and Great Wall Motors will once again have to pay import taxes on vehicle kits brought from abroad for assembly in Brazil, reversing a policy introduced as a short-term incentive for new manufacturers entering the market.

In the semi-knocked down model (SKD), vehicles arrive almost complete and need little local labour, while the completely knocked down system (CKD) brings parts separately for assembly in Brazil but still depends largely on imported components.

Under current rules, SKD kits face an 18 per cent import tax and CKD kits pay 16 per cent. Both rates have risen to 35 per cent, a shift that sharply increases costs for manufacturers that rely on imported parts rather than full local production.

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The tariff break began in August after the government agreed to a request from BYD as the Chinese company prepared to launch large-scale manufacturing in Brazil.

South China Morning Post